The proposal – to be considered at a meeting of Council later this month – follows a major review of the administration of taxi licensing in the town.
If agreed, a total of nearly £700,000 will be repaid to those affected, covering the four years from 2012/13 to 2015/16.
Just under half of the sum will be met from a surplus within the existing taxi licensing budget, with the balance covered from Council reserves.
At the root of the over-charging was the Council’s ‘cross-subsidy’ approach to drivers’ fees, in which increases in fees to vehicle proprietors and private hire operators were used to off-set the fees payable by drivers.
Earlier this year, following a decision by the local government ombudsman, the Council approved a new fully costed taxi licensing fee structure, and work was undertaken to establish the level of reimbursement required for operators.
Councillor Julia Rostron, Middlesbrough Council’s Executive Member for Adult Health and Social Care, said: “Our approach to taxi licensing for many years has been similar those of authorities up and down the country.
“Our aim has always been to be fair and even-handed, while offering an effective and responsive service.
“We have always endeavoured to support drivers as many are of limited means, but now accept that this approach could not be legally justified.
“However we will not seek to claw back any of the driver under-payments, particularly as the recent review has resulted in a significant increase in their licence fees.”
The report on the proposed will be considered at a full meeting of Middlesbrough Council at the Town Hall on Wednesday, March 30.